Is an accountant really necessary for your beauty business?
It is commonly believed that only big companies need a financial support team, but in my experience of working with hundreds of businesses, this is not the case.
Larger, established salons can swallow the occasional financial hiccup, but a small one may be destroyed by it. If you’re the only person in charge, you’re vulnerable because you only have your knowledge to rely on.
Your job is to be a beauty professional, and you may be completely unaware of financial ticking time bombs in your business that an accountant would spot.
What financial services can do for you
Bookkeepers help businesses keep accurate records of financial data, while accountants are advisors who use bookkeeping as a tool to interpret the data for business owners, providing the information they need to understand and improve their operation.
The goal is to set up accounting and cash flow systems to enable you to understand what is really happening with your money at any point during the year.
If you can’t answer the following questions about your salon with confidence then it may be time to take on an accountant:
1. What services or treatments are the most and least profitable?
2. Are your offers converting and making money?
3. Can I afford to pay my bills as they become due?
4. Will I be able to afford to add to my team? If so, when?
5. How is the business performing overall?
6. Will my business provide me with the income and lifestyle I need?
When to consider hiring help
Some people hire an accountant on the day they start trading and treat this person as a kind of support system for business matters. It comes as no surprise that these people often have a higher success rate of staying in business.
However, there are many reasons that trigger a salon owner to seek help later down the line, such as:
1. They need assistance filing accounts or tax returns
2. Money is an ongoing issue and they realise they need answers to the earlier questions
3. They are doing some form of accounts but it is inadequate
4. Bookkeeping is taking time away from running their business
5. They are exhausted and need at least one task handled for them.
Where to find an accountant or bookkeeper
Always look for an accountant or bookkeeper that is a member of a recognised professional body, such as the Association of Chartered Accountants (ACCA), Institute of Chartered Accountants in England & Wales (ICAEW) or Institute of Certified Bookkeepers (ICB) and check that they provide the services you need, such as payroll.
Other important considerations include:
1. How comfortable you feel with them. Do they make you feel supported or stupid?
2. How interested in your goals and dreams they are, wanting to know why you do what you do, not just what it is that you need help with at that time
3. Are they keeping up with trends in technology and productivity that they can pass on to you? As a minimum, an accountant should be using cloud accounting packages
4. Will they review your goals with you at least every three to six months?
How much it will cost
Fees will vary based on business type, size, turnover, and the number and complexity of transactions. While some bookkeepers still charge by the hour, if possible, opt for someone who works on a fixed fee. Accountants, however, charge per year and often accept payment in monthly instalments.
For a sole trader, contractor or freelancer, fees can be between £30 and £180 per month. For limited companies, it can vary from £100 to £1,200 per month.
If you can’t afford external help just yet, at least invest in proper accounting software with a cloud-based programme – the better the bookkeeping, the cheaper the accounting fees. And know that simply by taking the first steps towards becoming aware of your overall financial situation you will be taking your salon in a more profitable, successful direction.
Georgette Rowland Osborne is a business expert who helps “financially overwhelmed” businesses streamline their finances. She is also an author, speaker and podcast host.